Shortly after the disaster that occurred last January in Brazil at the Brumadinho tailings dam and the repercussions for the Vale mining directive, little has really changed in the process of environmental permits in the country. In early 2019, the tailings dam that the group operated near Belo Horizonte, in the state of Minas Gerais, collapsed and killed more than 260 people, including company employees and residents of the area.
On the environmental front, the enormous volume of sludge, with high concentrations of iron, aluminum, mercury and other toxic substances, destroyed vast areas of local vegetation and contaminated the Paraopeba River. After the tragedy, many experts predicted that there would be significant changes in the processing of environmental licenses for mining projects and that stricter rules would be imposed. However, the expected changes have not materialized.
“Since what happened in Brumadinho, there have been no significant changes in the regulation of environmental permits for mining activity,” Curt Trennepohl, former director of Ibama, Brazilian regulator of environment and renewable natural resources, told BNamericas. “The crucial question regarding the rules of environmental permits does not refer to a change in legislation, but to the application of the law. Brazil has one of the most advanced and strict environmental licensing laws in the world. We just need to respect it,” added Trennepohl, also a lawyer specializing in environmental permits.
The Brumadinho disaster took place during the first month in the office of President Jair Bolsonaro, who has promoted a laxer environmental regulation since his 2018 election campaign on the grounds that this would lead to economic expansion. This narrative raise concern among experts, who see an omen of a deterioration in environmental protection in Brazil.
“In addition to the fact that we have not seen changes since Brumadinho, a bill in Congress is currently under discussion that could allow a model to accelerate the licensing of the projects, which would represent a relaxation of the current rules,” he told BNamericas Maurício Guetta, legal expert of the ISA socioenvironmental institute.
GREATER ENVIRONMENTAL LIABILITIES
Although environmental licensing rules have not been tightened as originally expected, sector actors face greater risks in mining activities in terms of responsibilities. Currently, the State Prosecutor’s Office of Minas Gerais is carrying out an investigation and in the next few days would file criminal charges against former executives and other individuals linked to Brumadinho. “It is likely that they are unprecedented charges that result in convictions and executive arrest. In this scenario, with this new risk, we are already seeing investors and companies reinforcing their compliance programs,” according to Trennepohl.
IMPACT ON INSURANCE
More worrying is the fact that mining companies operating in Brazil face great difficulties in accessing insurance coverage after the Brumadinho case. “At this point, it is very difficult to find a reinsurer that accepts the risk of mining activity, mainly with those companies that have dams near cities, since these types of structures carry a great accident risk,” Ricardo Géo told BNamericas , founding partner of the local broker Deal Seguros, specialized in the corporate insurance segment.
According to Géo, insurance prices for mining activity are now higher than a year ago. The resistance of insurers to take risks in the segment is not an isolated problem and generates a constant fear among the inhabitants of cities near the dams. Earlier this month, in the town of Conceição do Mato Within the state of Minas Gerais, a warning siren sounded to alert the population of a risk of collapse in the local tailings dam, operated by Anglo American, which caused panic and health problems in the nearby community. According to Anglo American, the siren was activated by accident and the company is investigating the incident. He then reaffirmed that the dam is safe and presents no risk to the population.